Zheng Tanjun was photographed in Kunshan, Jiangsu Province, in August 2023.
In 2023, Internet companies will "tacitly" choose to focus on their main business and shrink their fronts. However, Meituan's local life track is constantly competitive, and the most threatening is Douyin, which has huge traffic.
On December 19, it was rumored that Douyin was talking to Ali about acquiring Ele.me. Subsequently, the relevant person in charge of Douyin said that Douyin has no such plan. Ele.me also responded**: "There is no such thing. ”
The outside world is very concerned about whether Meituan can maintain its leading position in the market after the major giants leave to do local life
Giants compete for layout
The Internet industry has entered the era of stock, and there is still a lot of room for growth in the local life track.
According to iResearch, the size of China's local life service market in 2020 will be 195 trillion yuan, and this figure will grow to 35 by 20253 trillion yuan. At the same time, QuestMobile data shows that in April 2023, the penetration rate of the whole network of the local life integrated service industry was 384%, and the penetration rate of food delivery service is 156%。
Based on this, many giants have successively made efforts in local life.
Kuaishou launched an official local life mini program in April 2023 to build its own trading system. Tencent's ** account has already started the internal test of local life. Pinduoduo's Kuaituan Group will start attracting investment in local life in March 2023. Four months later, the Pinduoduo app launched the local life section in the recharge center on the homepage. Recently, Pinduoduo's Duoduo Grocery has also been rumored to be testing local life businesses in Guizhou, Hainan and other provinces to recruit local life merchants.
In March 2023, Local Life became one of Alibaba's six major business groups, mainly including the "Daojia" business Ele.me and the "To Destination" business AutoNavi. At the same time, there was also news that AutoNavi announced the official merger with Ali Local Life's in-store business Koubei. In the future, all of Alibaba's local life-to-store businesses will be integrated into the entrance of AutoNavi Map.
For the quarter ended September 30, 2023, Alibaba Local Life Group's revenue increased 16% year-over-year to 155RMB6.4 billion, which was driven by the strong growth of Ele.me and AutoNavi. Local Living Group orders increased by nearly 20% year-on-year. Alibaba said that benefiting from the improvement of user acquisition and retention, as well as the increase in user demand, the annual active consumers continued to grow quarter-on-quarter.
At the performance meeting, Alibaba said that Local Life Group will continue to firmly invest in location-based technology services, and continue to focus on the two business positions of Local Life, namely the development of travel and destination technology services with AutoNavi as the main body, and the development of instant home technology services with Ele.me as the main body.
However, Ali Local Life Group is still in a loss-making state. For the quarter ended September 30, 2023, its adjusted EBITA was a loss of 256.4 billion yuan, compared with a loss of 33 in the same period last year$2.8 billion.
What makes Meituan feel more pressured is Douyin. In 2020, Douyin will launch the ** function;In the following year, the internal test takeaway business began;In August 2022, Douyin announced its cooperation with Ele.me;In September 2023, Douyin will expand its delivery business, adding 24 new cities to introduce "**distribution region** merchants" on the basis of 6 cities including Beijing, Shanghai, and ChengduIn October, Douyin Life Service launched the "Better Life Discovery Plan", planning to invest 500 million yuan in the next year to support high-quality store exploration content.
According to the data of Douyin life service, up to now, the number of dynamic sales stores cooperated with Douyin life service has reached 4.5 million, and the number of cooperative service providers and ** talents has increased by 179% and 289% respectively compared with last year.
According to Meituan, as of December 31, 2022, the number of active merchants in Meituan reached 9.3 million, a year-on-year increase of 51%。In subsequent quarterly reports, Meituan did not disclose the latest data on active merchants. At the same time, according to QuestMobile data, as of April this year, Meituan and Douyin have more than 300 million overlapping users, and the proportion of overlapping users in Meituan users has reached 810%。It can be seen that Douyin is a threat to Meituan.
It is worth mentioning that in November 2023, it was reported that Pu Yanzi, the head of commercialization of Douyin Group, will concurrently serve as the head of the life service business, and Zhu Shiyu, the former head of the life service business, will be transferred to the first-level department "Growth and Business Solutions". Many people believe that Douyin will still pay attention to investment in life services in the short term.
Fulfillment costs account for more than half of the total cost
Meituan's revenue structure is basically in a state of "home delivery business (i.e., food delivery) contributes revenue, and store delivery business contributes profit".
Meituan's last annual report (i.e., the 2021 annual report) before reclassifying its business as a core local business and new business showed that in 2021, the revenue of food delivery was 9631.2 billion yuan, operating profit margin is only 64%；Arrivals, hotels and tourism revenue 325300 million yuan, operating profit margin reached 433%。
As of now, the food delivery business is not an easy business to make money, and Meituan's delivery service revenue still does not cover the related costs. In the first half of 2023, Meituan's delivery service revenue was 372800 million yuan, and distribution-related costs amounted to 4030.6 billion yuan. During the same period, Meituan's total cost was $7350.2 billion yuan, distribution-related costs accounted for 5484%。
Despite earning "hard-earned money", the home delivery business is Meituan's moat. According to data from China Research Network, in 2020, Meituan Takeaway accounted for 69% of the domestic and foreign sales market share, and Ele.me had a market share of 26%.
It is worth mentioning that in April 2018, Alibaba and Ant Financial acquired Ele.me as a wholly-owned company. Daniel Zhang, then CEO of Alibaba, said in an employee letter that as one of the most frequent applications of local life services, takeaway services are an important entry point for local life.
The low profit contribution of the food delivery business has made new entrants such as Douyin increase their weight in the ** business of stores, which will affect Meituan's profit performance to some extent, so Meituan's response is also very fast.
In February 2023, Meituan launched the "** section;In March, the marketing tool "God is in demand" was launched to promote merchants' products through live broadcasts, ** and ** and other formsIn April, the monthly marketing campaign "Divine Coupon Festival" was upgraded, and the ** distribution business was launched in more than 20 cities across the countryIn June, the "Sharpshooter" live broadcast room was launched;In July, the homepage of the Meituan app set up a fixed entrance to "Meituan Live".In October, the "** tab" was launched in the center of the menu bar at the bottom of the homepage of the Meituan app, which was used as a short** traffic entry ......
Under the continuous defensive counterattack, Meituan's related expenses are also continuous**.
According to the financial report, Meituan's revenue in the third quarter of 2023 was 7646.7 billion yuan, a year-on-year increase of 221%；Meituan's sales and marketing expenses amounted to 1690.5 billion yuan, a year-on-year increase of 553%, accounting for 4% of revenue year-on-year7 percentage points to 221%。Meituan said that both the amount and the percentage of revenue increased, mainly due to the recovery of consumption, changes in the business environment and business strategies, which led to an increase in transaction user incentives, promotion and advertising spending.
In addition, Meituan's core local commercial segment had an operating profit of RMB10.1 billion, with an operating margin of 201% year-on-year decrease of 26 percentage points to 175%。Meituan said the decline in operating margins was mainly due to higher subsidy rates.
New business continues to lose money
Although it still has an advantage in the local lifestyle market, Meituan will also focus on the development of new businesses.
In the past few years, Meituan has successively deployed businesses such as shared power banks, shared bicycles, Meituan Preferred, Meituan grocery shopping, and Meituan taxi, in order to expand its business layout in local life, thereby driving the overall growth of its performance. However, judging from the current results, the new business segments where these businesses are located have not yet become a new growth point, and are even still losing money.
According to the financial report, in the third quarter of 2023, the revenue of the new business segment increased by 15% year-on-year3% to $18.8 billion;Operating loss narrowed by 24 year-on-year5% to $5.1 billion, while the operating loss ratio continued to improve to 272%。Although the loss of the new business narrowed, its revenue growth has not caught up with the core local business segment, which grew by 24% year-on-year in the third quarter of 20235%, up from 15 for new business3%。
Meituan said at the ** conference that in the fourth quarter, it will face more pressure on the growth rate of new business. On the one hand, the pressure on the bike-sharing business still exists, and the scale is declining;On the other hand, the growth of Meituan Maicai and Meituan Optimal faced a high revenue base last year. Among them, Meituan's losses accounted for a large proportion of the overall losses of new businesses, mainly due to macro unfavorable factors and the recovery of offline consumption, which led to a slowdown in its growth and more time to integrate operations.
At the same time, Meituan said, "If we find that the new business is not able to be converted into a valuable asset, then we will adjust the strategy." ”
At present, Meituan's moat in the field of food delivery is still solid, but the in-store business has been hit a lot - the former "battle of a thousand groups" has allowed Meituan to establish a leading position in the food delivery market. Nowadays, the layout of the giants has also "tacitly" bypassed the takeaway business and focused on the store**. In addition to the high-profile layout of Alibaba and Douyin, Meituan also needs to face a number of opponents such as Kuaishou, **hao, Xiaohongshu, and Pinduoduo.
Of course, major platforms are still in the stage of early investment and cultivating user habits, and Meituan still has an advantage. How to maintain the fundamentals of its core business while boosting the development of new businesses will be Meituan's challenges in the future.
Author丨Chen Xiangyu.
*丨Exploration Finance (ID: teccj6).